Atlantic City, without Gamblers

The blows came fast and furious for this struggling resort over the last week and a half.

Its newest and most expensive casino, Revel, declared bankruptcy for the second time June 19 and is threatening to close if it doesn't find a buyer. Four days later, the U.S. Supreme Court shot down New Jersey's effort to get sports betting, thus denying Atlantic City casinos an option they had long wanted to bring patrons in during the slow winters.

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And on Thursday, Caesars Entertainment Inc., which owns four casinos here, announced it was closing the Mardi Gras-themed Showboat by summer's end. About 2,100 employees received 60-day notices the next day.

The city had already shed the Atlantic Club, a smaller, underperforming Boardwalk casino in mid-January -- leaving it with 11 casinos.

If Showboat and Revel both shutter, the Boardwalk will have three large vacancies.

"Atlantic City is undergoing a massive economic transition," Atlantic City Mayor Don Guardian said at a news conference Friday at the site for Bass Pro Shop -- a nongaming attraction being built. "We know it is painful for those who are losing their casino jobs."

Liza Cartmell, chief executive officer of the nonprofit Atlantic City Alliance that's behind the five-year, multimillion-dollar DO AC marketing campaign, was more succinct.

"Recent developments in Atlantic City are part of the larger picture of excess gaming across the United States that's leading to painful economic decisions," she said Friday.

There are simply too many casinos and no longer enough gamblers to support them all, gaming experts say. Just in the Northeast corridor alone, 26 casinos have sprung up in the last decade -- including a dozen in Pennsylvania. A 27th opens in Baltimore in early August. The monopoly enjoyed by Atlantic City for nearly three decades has disappeared.

Since 2006, the city's revenue from slot machines and table games has dropped by about 50 percent -- while gaming capacity actually increased with Revel -- which experts say led to oversupply and the reason the market is now contracting.

Still, three out of 12 casinos closing or threatening to close within a half-year span has left this city reeling.

Just hours before the stunning news about Showboat, visitors along the Boardwalk were waxing over Revel's potential closure and its impact -- both financially and psychologically.

Atlantic City wagered big on Revel when it completed construction in spring 2012 -- its first new gambling palace in nearly a decade. Revel promised to give the Borgata -- the last casino to open here, in July 2003, a run for its money. Both were modeled after Las Vegas-style mega-casinos that had everything -- gambling, shopping, dining, and clubbing -- under one roof.

"It's lovely. It would be a shame if it closes," said Gail Moresco, 78, of Jackson, N.J., who sat on a bench overlooking Revel with husband Vincent, 81. They marveled at the steel-and-blue-glass structure that looks like a giant wave on the northern end of the Boardwalk.

"But no one knows about the bankruptcy," said Vincent Moresco, "because not too many people go there."

On Friday, the shock of Showboat adding to the extinction list had not quite sunk in.

"It's scary, but the Lord will provide," said Angela Thomas, 53, of Absecon, a hotel maid at the Showboat for the last 23 years, who was among the workers notified the casino will close by Aug. 31. 'Pretty upset'

"We heard it was coming, but we just didn't expect it so soon, I guess," said Thomas after she finished her shift. "Lots of people are pretty upset."

It was a far different picture in Atlantic City just over two years ago. Excitement filled the air as the city's spirits seemed to soar along with the 57-story Revel -- the most expensive casino ever built here, at $2.4 billion. On April 2, 2012, when Revel made its debut, there was a parade along the Boardwalk of those wanting to see it. It was a tourist attraction, as tens of thousands came through its doors just to see what the buzz was about.

Revel was heralded as Atlantic City's new meal ticket -- its second wind -- which would bring in more conventioneers, affluent New Yorkers who stayed overnight, shoppers for its high-end mall, and food enthusiasts to pack its celebrity-chef restaurants. It was highlighted in the background for Atlantic City promotions.

None of the above materialized, and this beleaguered city is now having to accept the harsh reality: Revel is a failure. The casino, while changing Atlantic City's skyline, did nothing for its bottom line.

An auction is set for Aug. 6. Its employees were told if no buyer is found by Aug. 18, the casino will close Sept. 1. Guardian said several groups have been kicking the tires and taking tours of the casino.

"When you have a fire sale, it brings out really smart people that have an idea of what to do with the property," said the mayor of Revel's predicament. "A lot of them have the ability, financing, and the business acumen to turn the property around."

Lori Grajek, 48, of Folcroft, Delaware County, visited Revel for the first time last week. She, too, noticed how empty it was -- even in the summer.

"There's nobody in there," she said, as she walked onto the Boardwalk with a friend, Robin Diehl. "There's no table games. It's dead."

Ironically, the pair headed next door to Showboat to check into their $89 room. Five hours later, a casino union official confirmed Showboat was closing .

After the tiny Atlantic Club closed in mid-January, some expected another similar-sized casino from the 1980s, such as Trump Plaza, with not much to offer other than a gaming floor and a room, would be the next to go dark.

But not Revel and Showboat. Both are among the largest casinos here and feature plenty of nongaming attractions. Showboat has the popular House of Blues concert venue, while Revel does well among 20-somethings with its HQ nightclub and H2O pool and lounge.

The State of New Jersey kicked in $260 million in tax increment financing to ensure Revel would be built. Gov. Christie, while touring the completed property just before its 2012 opening, then called Revel "a turning point for Atlantic City."

A Christie spokesman said last week that the governor remained committed to his five-year revitalization plan for Atlantic City -- which, among other things, promises to keep gambling and casinos exclusively in the resort -- despite the town's recent streak of bad luck.

"There have been signs of progress in Atlantic City, but challenges still remain," spokesman Kevin Roberts said Thursday. "The governor is committed to seeing the five-year period through." Christie's five-year revival plan expires in February 2016.

Roberts, contacted again Friday after Showboat's announcement, said the governor was sticking with his statement.

The casino closings come at a particularly tough time for Atlantic City. A series of casino tax appeals have strapped it financially. The city is already having to pay more than $350 million in property tax refunds to the casinos as their value, along with their gaming income, has plummeted.

The latest settlement came this month when the city agreed to refund Borgata, its biggest taxpayer, $88.25 million for property taxes assessed for 2011-15.

Bleeding dollars

With the city's coffers bare, Guardian -- the first Republican to lead the city since 1990 -- has asked Trenton for millions of dollars in state aid to balance next year's budget. Each casino closure means the loss of another major taxpayer and millions in property tax revenue for his city.

Time and money are quickly running out for Revel. The casino, according to last week's bankruptcy filing in Camden, is bleeding $2 million a week, or $285,714 per day, $11,904 per hour.

Cocktail server Serena Jensen, 26, is among Revel's 3,500 employees awaiting their fate. She makes $5.05 an hour and relies mostly on tips.

'Another nail'

"Management told us that, until they ask for our black [cocktail] dresses back to keep coming to work," Jensen said as she handed a Diet Coke to Doug Firth, who was behind a penny slot machine at Revel last week.

Firth, 41, of Pottstown, Montgomery County, tipped Jensen $5 for the drink, and said a Revel closure would be "another nail to the coffin" for the resort.

"That would say Atlantic City is dying," said Firth, a pharmacy technician who stayed two nights at Revel's 1,500-room hotel.

Not necessarily, said Zarnett, the gaming analyst. He sees only one viable option for Atlantic City, as former feeder markets -- including Pennsylvania, New York, and Maryland -- have become direct competition.

"The future of Atlantic City will be fewer casinos and improved profitability for those who remain," Zarnett wrote in an analysis Friday in the heels of Showboat's announcement. "The market needs to be right-sized.

"Today, we believe Atlantic City can support only six, maybe seven casinos, and thus, more supply needs to come out of the market," he said.

Guardian said the city's future -- and survival -- would depend on diversification: more concerts on the beach, more restaurants, more shopping, more conventions, less gambling.

"Atlantic City is creating new jobs, building new attractions, and diversifying our economy beyond just gaming," he said. "We have cranes in the air. We're building more retail and more convention center space. We have major new, nongaming investment in Atlantic City from private industry, and they are seeing results."

As far as the casinos here seeming to fall like dominos of late, Guardian remains optimistic despite the uncertainty.

"It's a gaming town that's no longer a monopoly," he said. "The market is going to determine how many casinos Atlantic City can have that can be successful.

Gov. Christie on Friday signed into law a bill repealing New Jersey's ban on sports wagering, but that doesn't mean casinos will begin letting consumers gamble on football games this weekend.
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